How to Screen Tenants for a Rental Property - 2024 Guide
Learn how to screen tenants for a rental property, where to find reliable tenant screening background checks, and what screening questions to ask.
Table of Contents
- What is tenant screening?
- What is a tenant screening report?
- how to screen tenants for a rental property?
- How to screen tenants objectively
- Tenant Screening Checklist
- Tenant screening background check
- Tenant screening questions – what landlords can and cannot ask
- How much does tenant screening cost?
- The best tenant screening services for landlords
- Free tenant screening options
- How to check my tenant screening report?
- Tenant screening laws in California
- How long does tenant screening take?
What is tenant screening?
Tenant screening is a systematic process used by landlords and property managers to assess the eligibility of potential renters. The aim is to gauge whether the tenant is a good fit for your property. For example, will the prospect be a responsible tenant? Will the prospect pay rent on time? Will the prospect respect the neighbors and the property? Tenant screening can help you answer all these questions.
While the specifics of the screening process might vary amongst property managers or landlords, the general purpose remains the same. Also, tenant screening processes can vary depending on regional laws, property owner preferences, or HOA rules.
What is a tenant screening report?
A tenant screening report pulls information from a variety of background checks, including credit scores, rental histories, and criminal records.
Because this document combines findings from a variety of sources, the screening report provides a consolidated snapshot of a potential renter’s background. Landlords will use this report to make an informed decision about whether or not to accept prospective tenants.
Here’s what might typically be included in the tenant screening report:
- Personal identification, such as full name, date of birth, and pertinent details to establish tenant identity.
- Credit report, including credit score, payment history, bankruptcies or other financial judgements.
- Criminal history, such as felony and misdemeanor convictions, pending criminal cases, and sex offender registry status.
- Rental history, including previous addresses, names and contact details of past landlords, evictions or broken lease agreements, and payment history (e.g., late payments, unpaid rent)
- Employment verification report that includes current and past employers
- References, typically provided by the tenant and may include previous landlords
- Income verification through pay stubs, tax returns, or bank statements.
- Legal judgements such as evictions, money owned to previous landlord(s), etc.
Landlords and property managers must ensure that all information gathered and used complies with federal, state, and local laws, including the Fair Credit Reporting Act (FCRA) and the Fair Housing Act. Discrimination based on race, color, national origin, religion, sex, familial status, or disability is prohibited. Depending on the state, there might be additional protective classes.
How to screen tenants for a rental property
Screening tenants effectively is important for safeguarding your rental property. Start by gathering data through a rental application, which captures both personal and employment details. Engaging potential tenants in a brief discussion can help you gauge their suitability and give you a glimpse into their personality and future plans.
Next, you need to dive deep into their background checks. Credit checks can help you ensure financial stability. Criminal checks can help you ensure the broader community’s safety. Offering potential tenants an opportunity to view the property can also serve as a touchpoint to gauge prospective tenants.
Finally, allowing the prospective tenant to review a comprehensive lease agreement, detailing mutual responsibilities, can help address concerns before they arise. Throughout this process, fairness and consistency, in line with housing laws, is critical for your legal protection. In the next section, we provide some important tips to remain objective in the tenant screening process.
How to Screen Tenants Objectively
Remaining objective and consistent during tenant screening is not only a best practice for selecting reliable tenants but also essential for compliance with Fair Housing laws.
As a landlord, you can ensure objective and consistent tenant screening by having a clearly defined, written set of rental criteria. Automated tenant screening platforms can be helpful in reducing biases and ensuring applications meet preset standards.
Regularly reviewing Fair Housing laws will be helpful in fair tenant selection. Open communication about criteria with potential tenants from the beginning also establishes clear expectations and facilitates a straightforward rental process. In summary, a blend of technology, documentation, and education will help you to maintain objectivity in tenant screening.
7 Tips to Ensure Tenant Screening Fairness
- Write down your criteria for what qualifies someone to rent your property.
- Automate the process so that you can reduce human bias. You can do this by using a tenant screening service that will automatically flag applications that don’t meet your criteria.
- Freshen up on the Fair Housing Act and other local laws.
- Document everything and keep thorough records, including reasons for any rejections based on your criteria.
- Avoid making emotional decisions. Remember that renting out property is a business transaction. While it’s natural to empathize with potential tenants and their personal stories, it’s crucial to stick to the criteria for the good of the business.
- Ensure that potential tenants are aware of your criteria from the outset. Transparency about the requirements can set clear expectations and can reduce the number of applicants who don’t meet the criteria.
- Seek advice from a property management professional or legal counsel when in doubt!
Tenant Screening Checklist
- Check that the rental application is complete:
- Personal details
- Employment information
- Previous addresses and landlords
- Landlord references
- Conduct the initial interview:
- Discuss reasons for moving
- Talk about the duration of stay
- Address any specific needs or concerns
- Reference verification:
- Call previous landlords for feedback
- Contact current employer for job verification
- Reach out to personal references
- Assess financial stability:
- Check if monthly income is at least 2.5 times the rent (this can be a preference that changes per landlord)
- Review recent pay stubs or tax returns
- Look for consistent employment history
- Credit and Background Checks:
- Evaluate credit score and history
- Scan for any past evictions
- Check for any criminal records
- Check for non-discharged bankruptcies
- Review lease agreements with the prospective tenant:
- Have the prospective tenant(s) review a draft of the lease agreement and the HOA Rules and Regulations of your property (if applicable).
- Make sure the prospective tenant(s) agree to move in within 14 days of submitting a rental application. This requirement can weed out unsure candidates and attract serious renters.
- Review Compliance with Fair Housing Laws:
- Ensure no discrimination based on protected classes
- Make sure all applicants were judged using the same standards
* Click the image to enlarge it *
Tenant Screening Background Check
- Criminal Records: This includes checking for both minor offenses and more severe felonies. It’s crucial to note that the presence of a criminal record does not automatically disqualify a tenant; rather, the nature and recency of the offense are considered.
- Previous Evictions or Other Court Judgements: A history of evictions can be a red flag. This component focuses on identifying any past evictions and understanding the reasons behind them.
- Employment Verification: This ensures that the tenant is gainfully employed and can afford the rent. It can also reveal any discrepancies between the application and actual employment details.
- Non-Discharged Bankruptcies: Renting to a tenant in a current non-discharged bankruptcy case is up to your discretion.
For property managers and landlords, the background check is a protective measure. It mitigates risks associated with potential property damage, delayed rent payments, or disturbances in the community. By being thorough in this step, landlords can foster a safer, more harmonious living environment for all tenants.
It’s essential for both landlords and tenants to understand that tenant screening background checks are governed by various laws, including the Fair Credit Reporting Act (FCRA). Landlords must obtain written consent from applicants before conducting a background check and must provide a copy of the report to the applicant if they are rejected based on its contents.
Tenant Screening Questions
Tenant screening questions are another essential tool for landlords and property managers to get a deeper understanding of potential tenants. While it’s crucial to ask the right questions to ensure a good tenant fit, it’s equally important to be aware of which questions are off-limits due to Fair Housing regulations. Good Life Property Management encourages all landlords to familiarize themselves with the Fair Housings Basics.
Most screenings questions will fall under these categories:
- Basics
- Financials
- Background and references
- Motivations for moving
Questions landlords CAN legally ask:
- What is your current employment situation?
- Can you provide references from your current and previous landlords?
- Have you ever been evicted from a rental property?
- How many people will be living in the unit?
- Do you have pets? If so, what kind and how many?
- Can you provide proof of income or recent pay stubs?
- Why are you moving from your current residence?
- How long do you intend to stay?
- Have you ever broken a rental agreement or lease?
Depending on your criteria for a compatible tenant, you may want to consider adding some more questions that suit your own screening process.
However, landlords are legally prohibited from asking questions related to race, color, religion, national origin, sex, familial status, and disability. Here are some examples.
Questions landlords CANNOT legally ask:
- What is your race or ethnicity?
- Are you married, single, or divorced?
- Do you have children or plan to have children soon?
- What is your religion or place of worship?
- Are you disabled or do you have a specific medical condition?
- What country are you from? Or, What’s your first language?
- Are you a member of a protected class?
- Do you receive public assistance or are you on welfare?
- Questions regarding sexual orientation or gender identity.
How much does tenant screening cost?
- Basic credit check: $15 to $40.
- Comprehensive credit report: $25 to $50.
- Criminal background check: $15 to $40.
- Eviction history: $5 to $20.
- Complete tenant screening packages: $35 to $75, though prices can occasionally go higher based on the depth and breadth of the investigation.
- Additional checks: Some landlords might opt for extra checks like employment verification, previous landlord interviews, or reference checks. These can sometimes come with added fees, typically ranging from $5 to $20.
When to hire help - the best Tenant Screening Services for landlords
Managing multiple properties can quickly become overwhelming, especially when it comes to tenant screenings. For landlords who may not have the expertise in interpreting tenant screening reports, turning to professional screening services can be a smart move.
Here are some recommended top tenant screening services for landlords:
- Experian RentBureau: Offers credit checks tailored for rental applications and includes payment history from other landlords.
- TransUnion SmartMove: Provides instant tenant background checks, credit reports, and a leasing recommendation based on the provided data.
- MyRental: Offers a suite of screening services, from basic credit checks to premium packages that include criminal background checks and eviction histories.
- RentPrep: Known for its live screening agents who check background reports and verify information for accuracy.
- LeaseRunner: Offers a la carte services where landlords can pick and choose which checks they want, from credit checks to eviction histories.
- National Tenant Network (NTN): With over 35 years in the industry, NTN provides comprehensive reports, including credit histories, criminal checks, and eviction reports.
Free Tenant Screening Options
- Zillow Rental Manager: Known primarily as a real estate listing site, Zillow also offers a free tenant screening service. Landlords receive a credit report and a background check, but the cost is typically passed on to the applicant.
- TurboTenant: This platform offers free tenant screening services for landlords, including credit reports, criminal background checks, and eviction histories. However, similar to Zillow, the tenant usually covers the cost.
- Apartments.com (previously Cozy): While they offer a suite of landlord tools, their tenant screening service includes credit reports and background checks, with the fee typically being paid by the potential tenant.
- Self-screening: Some landlords opt to handle the screening process themselves, asking potential tenants to provide recent credit reports (which they can obtain for free annually from major credit bureaus) and then conducting informal background checks, like calling references. While this method is free, it might not be as comprehensive as using a dedicated screening service.
- Local Housing Agencies: Some local or state housing agencies offer free tenant screening services or resources to landlords, especially those renting out affordable housing or participating in housing programs.
- Online Search: A simple online search or a check on social media platforms can give landlords an idea about the potential tenant’s lifestyle and character. However, it’s essential to tread carefully here to avoid violating privacy laws or making decisions based on discriminatory factors.
- Public Records: Landlords can manually check public records for eviction histories or criminal backgrounds. Many local jurisdictions have online databases, though this method can be time-consuming and might not capture data from outside the immediate area.
How to get a tenant screening report?
To secure a tenant screening report, you need to determine the scope of information you’re interested in, i.e. credit scores, eviction histories, or criminal backgrounds. Once decided, you can work with a trustworthy tenant screening service.
Remember to obtain the prospective tenant’s written consent to access their personal data. This is commonly secured through the rental application. By providing the necessary details to the chosen screening service, you can get a comprehensive tenant report.
How to check my tenant screening report?
Tenant Screening Laws in California
Tenant screening in California is regulated by a combination of federal and state laws that are designed to ensure fairness, non-discrimination, and the protection of personal data.
At both the federal and state levels, Fair Housing Laws prohibit discrimination based on race, color, religion, sex, familial status, national origin, and disability. In California, these protections are further expanded to include sexual orientation, gender identity, source of income, and other categories.
Under the California Consumer Credit Reporting Agencies Act, landlords can request a tenant’s credit report. They must inform the potential tenant of any adverse action (like a rejection) based on the report’s contents and must provide the name and address of the agency that supplied the report.
If a landlord takes an adverse action (denying an application, requiring a co-signer, or asking for a higher deposit) based on information found in a credit report or any other form of consumer report, they are required by the Fair Credit Reporting Act (FCRA) to provide the applicant with an Adverse Action Letter. This letter informs the applicant about the adverse decision, provides the contact information of the reporting agency, and informs the applicant of their right to obtain a free copy of the report and to dispute its accuracy.
Additionally, in California, landlords can charge a screening fee, but there are limits. The fee can only cover the actual out-of-pocket costs of gathering information about the applicant, like credit report fees. As of December 2022, the maximum landlords can charge for screening fees is $59.67.
With regards to privacy, the California Investigative Consumer Reporting Agencies Act requires landlords to inform prospective tenants if they intend to access an “investigative consumer report.” These reports contain information on character, general reputation, personal characteristics, or mode of living.
There are also limitations on questions landlords may ask potential tenants. Landlords in California cannot ask about arrest records that did not lead to a conviction. They also cannot consider a summary offense (a minor violation) that happened more than two years ago.
Lastly, if a landlord does not conduct a personal reference check or does not obtain a credit report, they must return any unused portion of the screening fee to the applicant.
California’s tenant screening laws aim to strike a balance between a landlord’s need to secure reliable tenants and an individual’s rights to non-discrimination, privacy, and fairness. Always ensure to consult with legal counsel or keep up with current regulations to ensure compliance.
How long does tenant screening take?
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